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EU opens investigation into Polish tax incentive for shipyards

Staff Writer |
The European Commission (EC), or the executive arm of the European Union (EU), on Monday launched an in-depth investigation into a Polish tax scheme for shipyards, Polish Press Agency (PAP) reported.

According to PAP, The EU's executive arm has concerns that the scheme would give some shipyards a selective advantage over competitors.

In September 2016, Poland adopted a law giving shipyards operating in Poland an option to pay a 1 percent flat-rate tax on sales from the building and conversion of ships, instead of paying the generally applicable corporate or personal income taxes.

This option gives shipyards the possibility to pay less tax than under the normal corporate income tax (19 pct on taxable income) or personal income tax regime (18 pct or 32 pct on taxable income for natural persons, or 19 pct for entrepreneurs).

In addition, the payment of the flat-rate tax is postponed until the building or conversion of a ship is completed.

The EC started looking into the proposed tax incentive for shipyards after Poland notified the Commission in December 2016 of having introduced the measure.

The EC does not question Poland's right to decide on its tax system. However, under the EU Treaty, the Commission has to verify that the tax system respects EU State aid rules and does not "selectively favour certain companies over others," the EC wrote.

The EC is concerned that the aid would harm shipyards in the EU, which are not eligible to make use of the conditions under the Polish tax scheme.

In addition, the aid does not seem to be necessary, given that there are shipyards in Poland which are able to compete on the market on their own merits. This does not mean that Poland cannot intervene in its shipbuilding industry, stressed the EC.

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